Types of Loans

There are many different types of student loans. Most student loans are federal government loans. Since 2010, most of these loans are made directly by the government. This is known as the Direct Loan Program. There are also many older loans made by private lenders, but guaranteed by the government.

The good news about the federal government loans is that there are many different programs available to help you if you are having trouble repaying these loans. There are even ways to cancel these loans in limited circumstances. The bad news is that the federal government has extraordinary powers to collect student loans if you default. These powers, such as tax refund and federal benefits offsets, have no time limit.

There is also a separate private student loan market. Banks and other financial institutions make these loans without any financial backing from the federal government. Private loans can be very tempting given the soaring costs of higher education. However, you should be very careful if you are considering taking out a private loan. Among other problems, there are no interest rate limits on private loans as there are for government loans. Private loans also do not have the same range of flexible repayment and other borrower protections that government loans have.

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Please understand that we do not provide legal advice about individual cases. We request that users first review the information on this site and call or e-mail only with general questions not answered here. This web site includes links to other resources for those who seek individualized legal advice or other help not offered here. This site is for people who already have student loans and want to know more about their options and rights.